EFG-Hermes sells stake in Bank Audi after “No” to acquisition
After acquisition rumors circled through the regional media in October 2009, EFG-Hermes announced on January 18 that it had sold its 21.95 percent stake in the Lebanese bank for $913 million.
“After lengthy discussions with Bank Audi regarding a combination of the two businesses, it became evident after the events of 2008, that an amalgamation in the near future might be difficult,” said an EFG press release. The investment bank’s 7,554,148 ordinary shares and 2,483,034 global depository receipts sold for $91 per share, noted Bank Audi in a January 18 press release. The transaction resulted in $260 million in unconsolidated capital gains for EFG. Though Audi has not specified the buyer officially, Reuters, citing an anonymous source, confirmed that members of the Mikati family had bought some part of EFG’s shares. Arab Finance reported on January 17, citing sources close to the family that Naguib Mikati intended to acquire 14 percent of EFG’s shares. Zawya Dow Jones information shows that Deutsche Bank Trust Company Americas remains the largest shareholder in the bank holding 29.3 percent. Following the sale, Bank Audi announced that it had reached an agreement with Commerzbank to acquire Dresdner Bank Monaco in order to expand its private banking services in Europe.
Central bank to offer 7-year CD
According to Byblos, the Central Bank of Lebanon’s First Vice-Governor Raed Charaffedine, said the central bank will soon begin offering 7-year certificates of deposit (CD) to help ease the immediate burden of servicing the country’s staggering public debt, which reached $50.5 billion at the end of November 2009, according to Byblos Bank. The Lebanese-lira denominated papers will carry a fixed rate of 8.5 percent, and a variable rate based on the yield of the 6-month paper plus 1.21 percent. The central bank stopped issuing CDs in June of 2009 in order to encourage banks to lend in local currency after central bank circulars lifted reserve requirements on 60 percent of loan categories. These lending incentives are set to stay in effect until June, 2010 and possibly into 2011, central bank Governor Riad Salameh told Executive in December.
IFC buys 8 percent of Byblos Bank
The International Finance Corporation (IFC) acquired 8 percent of Byblos Bank as part of the bank’s effort to raise its capital by $250 million, said Byblos in a January 21 statement. The IFC, the World Bank’s private arm, bought 47,619,047 ordinary shares at $2.10 per share, bringing the aggregate purchase price of the sale to $100 million. Byblos Invest, whose Chairman Sami Haddad was formerly the director of the IFC’s Middle East and North Africa Department and minister of economy, will vote in favor of granting a seat on the bank’s board of directors to an IFC nominee. The Central Bank of Lebanon approved the sale on January 21 and the deal is set to close on June 30, 2010. Byblos has been granted large loans by the IFC on three separate occasions, totaling more than $94 million, according to the Byblos Bank’s website. These loans, offered in 1993, 1996 and 1999, were given to facilitate commercial lending and housing loans.
Majority foreign ownership allowed at Syrian banks
Foreign institutions may now own majority stakes in Syrian banks after the government issued a decree in early January. The decree made it possible for foreign shareholders to own 60 percent of the country’s local banks, up from the 49 percent previously permitted. The decree also raised minimum capital requirements for Syrian banks from between $32.6 million and $108.7 million — depending on the type of bank — to between $219.8 million and $330 million. The Syrian government gave up its monopoly on the country’s banks seven years ago. There are now 13 private banks operating in Syria in addition to the six banks still owned by the government. Although Western institutions are still absent from the sector, Lebanese, Jordanian and Gulf Banks, including several Islamic institutions, have expanded their presence since the market was opened.
Central bank foreign assets $28.3 billion
Lebanon’s central bank’s foreign assets grew 43.4 percent in 2009 compared to the previous year, reaching $28.3 billion from $19.7 billion in 2008. December 2009 saw the largest increase, with foreign assets growing $1.08 billion for the month, resulting in $8.6 billion in aggregate growth for the year.
Gold reserves at the Central Bank of Lebanon grew to $10.1 billion, a 25.3 percent year-on-year increase. The value of the reserves has been bolstered by a global rise in gold prices but is still below the all-time high of $10.8 billion in November 2009.
CBK board resigns en masse
All five remaining members of the board of directors of the Commercial Bank of Kuwait (CBK) resigned at the board’s January 12 meeting. The resignations came after board members Fouad Dashti and Ahmad al-Mishari both resigned without explanation in December, 2009. Elections for the seven seats will take place at the next ordinary general assembly; nominations closed January 31. A bank official told Zawya Dow Jones that the ordinary general assembly would take place sometime in the first quarter. In November, CBK posted losses of $8.69 million for the third quarter, citing bad loans as the main culprit. At the same time, the bank’s Chairman, Abdulmajeed al-Shatti, said in a statement “By the end of the year, the bank will be protected by adequate provisions against any meltdowns the financial crisis may leave.” The bank’s full 2009 figures have yet to be released.
“Not guilty” plea in UAE central bank scheme
All seven men accused of perpetrating the “largest monetary scheme” in the United Arab Emirates’ history have pleaded “not guilty” on charges that they attempted to steal $10.35 billion dollars from the UAE central bank in Abu Dhabi. The accused — two Germans, one Belgian and four Iranians — allegedly attempted to withdraw the money using forged documents. The European defendants claim their Iranian co-defendants told them that the funds were coming from another Iranian’s account and were to be used to begin work on a luxury hospital in the UAE. All seven defendants are facing charges of forging documents, swindling and fraud. If convicted, they will face up to 10 years in prison. The trial will resume on February 7.
